But after an initial rally, currency and stock markets headed sharply lower again.

Several major emerging markets, stars for much of the last decade, now seem increasingly vulnerable. The current mini-panic started last spring and summer, when the U.S. Federal Reserve indicated it would start tapering its $85-billion monthly bond purchase program, called quantitative easing or QEIII. (On Wednesday, it said it would cut back monthly bond purchases by another $10 billion.)

What does the emerging-market turmoil tell us?

(1:11)

The pullback from emerging-market currencies continued Thursday. Charles Forelle explains how we got here and what it might tell us about the state of the global economy.

Emerging markets had been one of the prime beneficiaries of cheap money and now that that money is getting slightly less cheap, investors are heading for the hills.

But two other leading currencies have become collateral damage. Over the past year, the Australian and Canadian dollars both have lost more than 10% of their value against the U.S. dollar, and currency traders expect them to fall further still. What’s more, their own central bankers have suggested they want to see their dollars even weaker.

That reverses a long period in which the Aussie and the loonie towered over the greenback.

More importantly, it shows — along with the tumble in emerging market assets — that the era of the 2000s, marked by China’s rise and the commodities supercycle, is over. Commodity currencies like the Aussie and the loonie are as passé as Hannah Montana and Britney Spears.

Countries like Australia and Canada “are rebalancing their economies by encouraging weaker currencies,” said Sebastien Galy, an FX strategist for Societe Generale in New York.

And central bankers aren’t shy about admitting it. In October 2012, one U.S. dollar bought you less than 98 Canadian cents; this past week, a greenback was worth C$1.11.

But Bank of Canada Governor Stephen S. Poloz said last week that “inflation is expected to remain well below target for some time, and therefore the downside risks to inflation have grown in importance.”

Translation: We’re more worried about deflation than inflation.

And the Bank’s Monetary Report put it even more bluntly: “Despite depreciating in recent months, the Canadian dollar remains strong and will continue to pose competitiveness challenges for Canada’s non-commodity exports.”

Investors got the message. Chief economist Douglas Porter of BMO Capital Markets published a report entitled “BoC declares open season on loonie.”

“Until today, the Bank of Canada had been careful not to openly talk down the loonie,” he told The Globe and Mail. “They effectively gave sellers the green light.”

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